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CONSTRUCTION WORLD
MAY
2016
PROPERTY
Fifty percent of residential proper-
ties are located in the Western Cape
and Gauteng, accounting for more
than two-thirds of the total residen-
tial-market value. Sandton and Parkmore in
Johannesburg, Green Point and Rondebosch
in Cape Town, and Rua Vista and Monument
Park in Tshwane – as well as La Lucia and
Mount Edgecombe in eThekwini in KwaZu-
lu-Natal – were among the high-value suburbs
with strong capital growth last year.
“Although the money supply of asset-
buying consumers is lessening, property
investment remains a top priority for many
South Africans, with the City of Cape Town
witnessing spirited growth in the housing
market over the last five years,” said Paul-
Roux de Kock, analytics director for Light-
stone, which provides information, valuations
and market intelligence on all properties
in South Africa. He was addressing this
year’s annual ‘Overview of the South African
Property Industry’ conference that took place
today at Val de Vie Estate outside Paarl in the
Western Cape.
The Western Cape is the location of over
17,5% of the 6,2 million residential properties
in South Africa, and lays claim to just over
a quarter (25,4%) of the R4,3-trillion total
value of the housing market. The City of Cape
Town’s residential property market witnessed
an increase of 12,3% in total value transacting
from 2015 to 2016; 45,8% of 700 000 proper-
ties are mortgaged, which in rand value sits
at just over R450-billion of the council’s total
housing market.
Paarl property lawyer and speaker at the
conference Stefan van Niekerk from Minitzers
Attorneys said, “In 2004, in the larger suburbs
of Paarl, 900 properties were sold at an
average price of R750 000. Ten years later, in
the same suburbs, 706 properties were sold at
an average of R1,85-million.”
While housing markets in Johannesburg
remain stable, Cape Town is showing much
stronger growth than all other metros. This
is supported partly by Gauteng homeowners
increasingly choosing the Western Cape (and
KwaZulu-Natal, where the eThekwini market
is similarly stable) when buying outside their
province, with the intention to eventually
relocate. “We’ve witnessed a steady increase
in ‘semigration’ over the last five years,” De
Kock observed.
Estate living
De Kock added that estate living – much
along the lines of what is offered at Val de
Vie Estate – is fast becoming a preference,
largely because of the associated security and
lifestyle-convenience aspects. In addition,
“Although luxury-market buyers are under
pressure, the estate-housing market in
general doesn’t dip as low or peak as high as
the rest of the luxury market. We therefore
expect it to outperform the luxury market
during the current downturn,” De Kock said.
Estates own a 5% slice of the overall
housing-market supply, but carve out a
staggering 15% share in total property-market
value, with more than half of estate proper-
ties being bonded. “Total value locked up in
estates is now close to the total value of all
residential properties in the City of Johannes-
burg, for instance,” says De Kock.
Over 50% of estates – which include
golf, equestrian and polo, coastal, lifestyle,
country and wildlife estates – are located in
Gauteng, and a further 25% in the Western
Cape. The average price of an estate home is
R2-million, almost three times the national
average of R700 000 for a home.
Van Niekerk added: “The total value
of properties sold in Paarl over the last 15
years is roughly R10-billion. Half of that was
through three lifestyle estates, two of which
were Val de Vie and Pearl Valley Golf and
Country Estate.”
Val de Vie Estate epitomises the increasing
demand for secure estate living, having sold in
excess of R700-million in developers’ proper-
ties over the past 18 months, and in excess of
R330-million in resales. Its recent acquisition
of neighbouring Pearl Valley Golf and Country
Estate is a further example of the robust
condition of the estate market.
“As figures suggest, investing in an
estate home is definitely the safer bet during
a downturn,” said Martin Venter, founder/
CEO of Val de Vie. “Gauteng homeowners are
choosing an estate lifestyle largely because of
the security aspect, and a stronger invest-
ment yield.”
The future
Lightstone’s forecast for 2016 is that nominal
house-price inflation will top out at around
3,5%, resulting in real deflation of home
values as the Reserve Bank battles to keep
the consumer price index (CPI) within the 6%
upper band.
If we see a positive turnaround in the
economy, the best-case scenario is that the
drop will be subdued and the year will end
off at around 4,6%. If we have to weather
any more major economic storms, however,
house-price growth could drop to 2,5% or
even lower.
RESIDENTIAL
property transactions increasing
>
PRIME CAPE
TOWN LAND
DEVELOPMENT
A prime piece of land in
Bantry Bay, once a land
claim belonging to the
Tramway Trust, is now
under development and
set to become the biggest
development ever in
Cape Town.